Preparing your long term financial future when moving to France

Preparing your long term financial future when moving to France

by | Jul 10, 2024

One assumes that you do not just wake up one morning and say, “I think I’ll move to France this week”… On second thoughts, perhaps you do! But even if you think it, you are unlikely to follow through immediately with your newfound dream. The point is, moving countries is unlikely to happen on a whim. A well-planned move increases the likelihood of it being successful.

financial planning when moving to France

Visa Requirements for Moving to France

There is the administrative side, for one. Since Brexit, the administrative side has become slightly more time consuming for British citizens, in that they must now apply for a visa prior to moving. Otherwise, however, little has changed and so long as you are well organised, there will be few barriers. US citizens, of course, have always had to apply for a visa.

Understanding French Tax Implications

The other major subject area to think about is your finances. For retirees or early retirees, for example, you may have been saving tax efficiently in your country of origin, be that the US or the UK, for all your working life. Now, suddenly, you are considering moving to another country. What does that mean? Should I sell everything before leaving? What works tax efficiently in France, what doesn’t? Perhaps I shall be so heavily taxed in France that I shouldn’t move after all?!

Fortunately, with regard to this last question I can reassure people that this is rarely the case. Indeed, coming back to the example of retirees and early retirees from the UK, this cohort are actually, more often than not, better off in France than in the UK, assuming they plan and execute carefully of course.

For US citizens, things are somewhat more complicated because the IRS requires them to declare their income in the US, regardless of where they reside. This makes efficient tax planning using French investment vehicles near impossible, due to incompatible reporting standards. Hence, the rest of this article will unfortunately not be wholly relevant to our US compatriots here in France.

Seeking Financial Advice in France

Up until now you may have been comfortable with your knowledge of how things work financially in your home country; indeed, comfortable enough not to take financial advice. Thus, this might be the first time you have ever, arguably, needed to take financial advice.

You might like to consider moving country like changing jobs. Whilst some of the knowledge you have garnered in the past will normally help you in your new position, in other aspects you are met by a clean slate, from which you must start again from scratch. It is a time in your life when you are most likely to make mistakes, so you should be ready to lean on people around you and those with a greater knowledge of the your new environment.

While impossible to give all the answers in this article, particularly as they are likely to be different on a case by case basis, let us consider some concrete questions that somebody moving from the UK to France should be asking themselves.

  • How much income tax will I pay in France?
  • How will my ISAs, pensions, rental income, or any other investments be taxed?
  • Should I keep some, any, or all of these investments in the UK, or not?
  • What are the most tax efficient ways to save and take income in France?

If you are able to confidently answer these four questions before leaving, then you are highly likely to be in a very comfortable place on arrival.

Spoiler alert (and the only question I can answer unequivocally) a UK ISA is not recognized in France. The French tax office will simply see through the ISA wrapper, meaning that, as a French tax resident, you should declare tax on the underlying assets via your annual tax return. If you are planning to stay in France indefinitely, it is therefore advisable to cash in ISAs tax free prior to leaving the UK.

Tax planning is never one size fits all. If you are unable to answer the questions above, you may end up sleep walking into some unpleasant surprises. Conversely, those with their eyes wide open, with a clear idea, ideally prior to moving, of exactly what their situation will be like on the other side, those people will be able to move with confidence and a free spirit.

To be part of the carefree latter group may require taking some qualified advice from a French regulated adviser, ideally before leaving Blighty.

This article was first published in the Connexion, July 2024

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 Disclaimer: The information in the above article concerning taxation is based upon our understanding of the taxation laws and practises in France at the time of writing. These taxation rules are subject to change and as such, Kentingtons cannot be held responsible for any inaccuracies that may occur. The information in this article does not constitute personal advice. Individuals should seek personalised advice in relation to their own situation.

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